Bioscrypt Reports Results for the First Quarter Ended March 31, 2006

Toronto, ON -- May 4, 2006

Bioscrypt Reports Results for the First Quarter Ended March 31, 2006
Top Line Growth Continues with 15% Revenue Increase; Improving Margins reflect the move to In-house Assembly

Toronto , ON (May 4, 2006) - Bioscrypt Inc. (TSX: BYT), a leading provider of identity verification technology, today announced its financial results for the first quarter ended March 31, 2006.

Bioscrypt’s first quarter revenue of US$4.02 million increased 15% from the US$3.50 million reported during the same period in the previous year. Product gross margin for the quarter was 47%, an improvement of 9% relative to the 38% in the prior quarter and an increase of 7% relative to the same quarter in 2005. Overall gross margins were 49%, reflecting the impact of the move to in-house final assembly.

“I am pleased to be reporting on the strongest first quarter Bioscrypt has produced since I first became involved with the Company as a Director back in 2001. Having generated greater than US$4 million in sales and reducing our cash usage to approximately $367,000, we are well on our way to meeting both the revenue and earnings objectives we set out for the year,” said Robert L. Williams, president and CEO of Bioscrypt Inc. “We were very encouraged that the software licensing component of our revenue grew by nearly 200 percent over the same period last year and that our finished reader product sales continued to increase despite the continued delay in large procurements and that our margins have improved as a result of the steps we took to bring assembly in house in the second half of last year.”

Expenses before amortization, stock compensation expense and other for the quarter were US$2.64 million compared to US$2.42 million in the previous quarter.

Bioscrypt’s loss before interest, tax, foreign exchange, depreciation and amortization (“EBITDA”) 1 of US$0.83 million or $0.01 per share in the first quarter is a difference of US$0.16 million relative to an EBITDA loss of US$1.17 million or $0.02 per share for the same period in 2005.

The first quarter net loss was US$1.37 million or $0.02 per share versus a net loss of US$1.27 million in 2005, or $0.02 per share.

“We are committed to the prudent management of our expenses to balance the need to infuse cash into the business in order to continue to stimulate substantial top line growth while maintaining the strong cash position we have today,” said Bruce MacInnis, CFO of Bioscrypt Inc. “In reducing our cash usage by 62% from the previous quarter we are confident we are on target to generate positive cash flow this fiscal year.”

Product sales represented 95% of total sales or US$3.81 million on approximately 10,200 units sold. Sales of the MVXX embedded solutions product represented approximately 63% of total unit shipments and 37% of product revenue while sales of Veri-Series™ products represented approximately 37% of unit shipments and 63% of product revenue. The total number of units the company has sold to date is now beyond 160,000. Licensing of software represented 5% of total sales and management anticipates that licensing revenue will account for approximately 10% of revenue for the year.

Certain of the comparative figures have been reclassified to conform to the inventory cost accounting policy change adopted as of January 1, 2006.

 Q1 New Client Announcements

As with every quarter, Bioscrypt’s revenue was generated by multiple sales through our team of more than 140 partners. Of note in the quarter were the following initiatives:

  • Amano, established in 1931 with more than 18 billion yen in capital, selected Bioscrypt Finger Scan Module for Integration in to Time Terminals .
  • U.S. International Port Selected Bioscrypt and AMAG to Provide Technology for Key Security Initiative. Multi-factor Authentication Solution to Heighten Security Measures at International Port

Conference Call

The Corporation will be hosting an earnings report conference call today at 8:00 a.m. Eastern Standard Time. The call can be accessed by phone by dialing 1-877-407-8035 or at www.vcall.com/IC/CEPage.asp?ID=103822 .

If you are unable to attend the original call, you may subsequently listen to the playback at 1-877-660-6853, account number 286, conference number 200270, for one week after the call or by going to www.vcall.com/IC/CEPage.asp?ID=103822.

1 - EBITDA is defined by the company as operating revenues less operating expenses and therefore reflects earnings before interest, foreign exchange, taxes, depreciation and amortization. Bioscrypt uses EBITDA, amongst other measures, to assess the operating performance of its on-going business, and applies the use of such measure consistently from quarter to quarter. The term EBITDA does not have a standardized meaning prescribed by Canadian generally accepted accounting principles and therefore may not be comparable to similarly titled measures presented by other companies. EBITDA should not be construed as the equivalent of net cash flows from operating activities.

For more information, contact:

Bruce MacInnis, CFO
Bioscrypt Inc.
905-940-7752

About Bioscrypt Inc.

Bioscrypt Inc. is a leader in identity verification technologies, providing solutions for converged physical and logical access, enabling unified authentication from Door to Desktop™.  Bioscrypt's offerings simplify the task of implementing secure access to facilities, equipment and IT networks. The company develops and sells biometric embedded solutions, access control readers and identity and access management software to protect the physical and network assets of international government agencies and leading organizations in the financial services, healthcare, and manufacturing sectors.  More information is available at www.bioscrypt.com.

Forward-looking (safe harbour) statement

Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes", "plans", "expects" or "intends" and other statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.

Bioscrypt Inc. and Bioscrypt, are trademarks of Bioscrypt Inc. All other trademarks or registered trademarks referenced herein are properties of their respective owners.